Email messages cannot be signed and encrypted due to an error displayed by Notifier and in the PGP Log. This behavior only occurs when you try to at least sign a mail.
The PGP Log shows:
MAPI Proxy: .\MAPIPGPMIME.cpp : Line 204 : CreateEncryptedPGPMIMEContent
Received PGPSDK Specific error code -11500 (bad passphrase)
This issue may occur when PGP Desktop is updated from an older version. The PGPSDK Service is obsolete and should be removed.
The easiest way to resolve this issue is to uninstall PGP Desktop and reinstall the 10.2.x version again.
PGP Desktop 10.2.x and above